Orion Office REIT (ONL)2024-08-08 20:22Property Portfolio and Occupancy - As of June 30, 2024, the company owned and operated 69 office properties with an aggregate of 8.0 million leasable square feet and an occupancy rate of 79.2%[111]. - The occupancy rate, including the pro rata share from the Arch Street Joint Venture, is 79.7%, or 80.9% adjusted for one operating property currently under agreement to be sold[111]. - As of June 30, 2024, the occupancy rate of operating properties was 79.7%, down from 80.4% as of December 31, 2023[133]. - The portfolio occupancy rate dropped to 79.2% with 69 operating properties and 8.0 million leasable square feet as of June 30, 2024, down from 86.2% and 81 properties with 9.5 million leasable square feet as of June 30, 2023[151]. - As of June 30, 2024, 64.1% of the company's office buildings by square feet were classified as class A, 30.9% as class B, and 5.0% as class C[116]. Financial Performance - For the six months ended June 30, 2024, total revenues were 102.214 million for the same period in 2023[135]. - Total revenues for the three and six months ended June 30, 2024 were 87.3 million, respectively, representing decreases of 14.9 million (14.4%) compared to the same periods in 2023[150]. - The net loss attributable to common stockholders for the three months ended June 30, 2024, was (0.60) per diluted share, compared to a net loss of (0.28) per diluted share, for the same period in 2023[135]. - Net loss attributable to common stockholders for Q2 2024 was 15.7 million in Q2 2023, representing a 115% increase in losses year-over-year[171]. - Funds from Operations (FFO) attributable to common stockholders for Q2 2024 was 24.4 million in Q2 2023, a decline of 55%[171]. - Core FFO attributable to common stockholders for Q2 2024 was 26.9 million in Q2 2023, reflecting a decrease of 47%[171]. Debt and Financing - The company has incurred significant amounts of indebtedness, with non-recourse mortgage notes associated with the Arch Street Joint Venture totaling 462.0 million, consisting of a 107.0 million under the Revolving Facility[180]. - The company reduced the borrowing capacity of the Revolving Facility from 350.0 million, effective May 3, 2024[173]. - The interest rate for the Revolving Facility is SOFR + 3.35%, with a maturity date extended to May 12, 2026[176]. - The average debt outstanding was 466.5 million for the three and six months ended June 30, 2024, compared to 39.0 million, subject to various conditions[129]. - The company completed approximately 578,000 square feet of lease renewals and new leases during the six months ended June 30, 2024, including a new lease with the U.S. Government for approximately 86,000 square feet[130]. - The company had a total of nine fully vacant operating properties as of June 30, 2024, with five leases expiring consisting of 597,000 square feet during the same period[130]. Cash Flow and Liquidity - As of June 30, 2024, the company had 243.0 million of borrowing capacity under the Revolving Facility[172]. - Net cash provided by operating activities decreased by 28.0 million for the six months ended June 30, 2024, compared to 0.3 million to 2.1 million[209]. - Net cash used in financing activities increased by (21.4) million for the six months ended June 30, 2024, primarily due to repayments on the Revolving Facility of 0.10 per share for the first and second quarters of 2024, with the third quarter dividend also set at 50.0 million until December 31, 2025, with approximately $45.0 million available as of June 30, 2024[207]. Market Conditions and Risks - The company anticipates continued challenges in tenant retention due to significant lease expirations and changing office space utilization trends[115]. - The Company is subject to credit risk concentrations due to tenants engaged in similar business activities or geographic regions, which could materially affect cash flows[215]. - The Company believes credit risk is mitigated by the high quality and diversity of its tenant base and consistent monitoring of potential problem tenants[216].